Startup ConnXus making national connections

Sep. 19, 2013

Rod Robinson is the founder and CEO of ConnXus. / The Enquirer/Leigh Taylor

Written by

A local startup that uses technology to connect diverse suppliers with large companies is making a national impact.

ConnXus, the 3-year-old firm based in Mason, recently landed a contract with McDonald’s Corp., and is in talks with several more large customers. The startup, which also services clients including Cincinnati Children’s Hospital Medical Center, Louisville’s Brown-Forman Corp., and Atlanta’s Grady Health System, is capitalizing on the importance big business puts on diversity spending.

Regions across the country, including Cincinnati and Northern Kentucky, have made giving minority and women-owned businesses access to opportunity a key part of economic development.

Cincinnati-based Procter & Gamble and Kroger are members of The Billion Dollar Roundtable, a group of 18 companies that spend at least $1 billion a year with minority and women-owned suppliers. The Cincinnati USA Regional Chamber runs the Minority Business Accelerator, which connects growing firms with the region’s swath of public and private companies.

Suppliers are still challenged, however, with consistently gaining access to opportunities. And chief diversity officers say it can be difficult to find new suppliers with proven track records.

Rod Robinson, ConnXus’ founder and CEO, understands the challenges. He has deep experience with supply chain management, including working as Cincinnati Bell’s chief procurement officer for three years.

In 2010, Robinson launched ConnXus, which allows diverse suppliers, including businesses owned by veterans, to register in its database. ConnXus‘ enterprise customers can use the database to find potential suppliers, see how other ConnXus customers rate those suppliers, and post bid opportunities. The database currently has more than 50,000 diverse suppliers.

ConnXus has also built powerful analytical tools to help customers track their diversity spending. Landing McDonald’s, which has hundreds of large suppliers like Coca-Cola, positions ConnXus for a new stage of growth.

“We’re really starting to knock down some pretty big customers,” Robinson said. “Once you land a McDonalds, you become validated pretty quickly.”

ConnXus typically performs multiple jobs for its enterprise customers. For example, ConnXus can analyze its enterprise customers’ accounts payable data to determine what percentage is with accredited minority and women-owned suppliers. Many of ConnXus’ enterprise customers also expect their suppliers to make diversity spending a priority. So those suppliers submit their data to ConnXus’ platform, which in turn gives ConnXus exposure to a new pool of potential customers.

The emphasis on diversity is rooted in a strong business case. Children’s Hospital’s goal is for at least 7.5 percent of its total annual construction and non-construction spending to be with diverse suppliers. De Asa Brown, Children’s Hospital’s supplier diversity manager, says the strategy is critical in order for the hospital to ensure quality.

“Our product literally is children,” she said. “We have to make sure we’re scouring the Earth to identify the best suppliers so that we won’t have any major disruptions that will impact our patients.”

Brown has been working with ConnXus for a year. The platform, she said, allows her to identify diverse suppliers and evaluate whether those suppliers are of sufficient size and scale to do business with the hospital. ConnXus has also introduced social networking tools that allow customers to rate suppliers, and make it easy for executives like Brown to get feedback on a potential supplier.

“The challenge for us is making sure suppliers are the best at what they do,” she said. “It’s the skill set, it’s the scale, it’s the scope, it’s the expertise. And what are their back-office operations like? They can make the best widget, but are they financially sound? Who else are they doing business with?”

The McDonald’s deal means ConnXus will create at least three new jobs, bringing its total number of employees to12. The company moved into the Mason Tech Center earlier this year. Robinson is in the process of closing a $1.4 million seed funding round; CincyTech, the downtown-based public-private investor, is ConnXus’ largest investor.

The company has also raised funding from angel investors, including former Procter & Gamble CEO John Pepper, who sits on ConnXus’ advisory board, and ConnXus recently secured funding from New York City-based funds STAR Angel Network and Serious Change L.P.

In any startup, investors are betting on the entrepreneur as much as they are the idea, and Robinson’s corporate background gives ConnXus edge, said Ralph de Chabert, chief diversity officer of Louisville-based Brown-Forman Corp. Brown-Forman makes wines and spirits, including Jack Daniel’s, and has been a ConnXus customer for about a year.

De Chabert said Robinson understands the challenges facing chief diversity officers. Chief among them is quickly accessing and evaluating a wide pool of potential suppliers. ConnXus’ digital platform allows de Chabert to do both.

“It was clear to me that he had been where I am, so he knew the frustrations of people in my position,” de Chabert said of his first meeting with Robinson. “He was smart enough to say, ‘I think there’s a technology solution for this, and I’m going to make it available.’ ”

Robinson said ConnXus is ultimately about creating jobs and helping businesses access opportunities for growth.

“I believed we could create a platform that provides suppliers with a fair chance,” he said. “If you have a few big minority suppliers, the easy way out is to do more with them. But you’re not helping create new jobs for startups and small businesses. This is an opportunity to create jobs.”